Logistics start-ups get FASTags to tackle cash crunch

New Delhi: Long-haul logistics start-ups like Rivigo and Truckola are installing FASTags on their fleet to enable automatic online payments at toll plazas, after the government’s move to demonetise high-value currency affected cash transactions and crippled movement at border check posts.

FASTags are radio frequency identification tags—issued by banks and affixed on a vehicle’s windscreen—that enable automatic online payments at toll plazas. They are linked to a prepaid bank accounts from which the applicable toll amount is deducted. This allows swifter passage through a dedicated FASTage lane and does away with long queues.

Post demonetisation, truckers faced acute congestion at toll booths due to shortage of cash. This impacted the business as companies, in some cases, could not meet their delivery timelines.

To contain the impact, trucking companies moved to FASTags. The tags cost Rs1,000 apiece, of which Rs200 is the security amount and the rest is the toll balance.

“The biggest headache was handling of cash at toll plazas and there was always the issue of change which was hard to get. So that got sorted completely. Secondly, a lot of time was spent in withdrawing the cash and running around the ATMs and then distributing it to the drivers. Now it is done centrally as one person can recharge all the tags within minutes and it saves a lot of manual effort,” said Vinay Dhanani, head of network operations at Rivigo.

Gurgaon-based Rivigo, which owns a fleet of 1,300 trucks, was earlier testing FASTags on 50 trucks, but since 8 November the company has moved over 90% of its fleet to the new technology, said Dhanani. Rivigo offers cargo delivery solutions for inter-city shipments.

Besides, FASTags offer 10% cash-back on every transaction at the tolls, said Raghav Himatsingka, founder of Truckola, a Mumbai-based start-up that aggregates trucks on its platform. “Toll is quite a prominent component of running the trucks and this makes it a good enough incentive for using RFID tags.”

About 60-65% of its 10,000 truck vendors have since moved to FASTags, said Himatsingka.

While it helps avoid cash transactions altogether, FASTags also improve operational efficiency and prevent leakages, said Navneet Agarwal, a director at Agarwal Packers and Movers. The company has FASTags installed on all of its 1,000 trucks.

“It helps us track whether the trucks are actually going from the highway and not skipping the toll through some shortcut. Secondly, drivers were paid in cash earlier and ran the risk of getting robbed. Now they carry minimum cash for food,” said Agarwal.

There are three institutions that power FASTags: a set of banks (issuer banks) that issue the tags; another set of banks (acquirer banks) which, in collaboration with National Highways Authority of India (NHAI), manage the payments infrastructure at toll plazas; and National Payments Corp. of India which acts as a clearing house.

From December last year, the government allowed four banks—ICICI Bank, State Bank of India, IDFC Bank and Axis Bank—as against only ICICI Bank earlier to issue FASTags, which somewhat accelerated their adoption process, said Ravi Palekar, chief executive officer of Indian Highways Management Co. Ltd, an agency carved out of NHAI to implement the Electronic Toll Collection project. However, the biggest driving force was demonetisation, he said.

According to data shared by NHAI, 100,960 FASTags alone were issued in December out of 212,195 issued till date from April 2016, when it was launched as a pilot project. The figure includes all types of vehicles, both commercial and private.

Palekar added that the implementing agencies installed FASTag readers in most of the remaining toll plazas in the later part of 2016. “Now 346 national highway toll plazas out of 358 have electronic toll collection capability and at places where we don’t have full-fledged equipments we use hand-held devices to process the payments,” he said.